A-W Land Co., LLC et al v. Anadarko E & P Company LP et al
Filing
453
OPINION AND ORDER DIRECTING BRIEFING by Judge Marcia S. Krieger on 5/28/19. (dkals, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior Judge Marcia S. Krieger
Civil Action No. 09-cv-02293-MSK-MJW
MARVIN BAY and MILDRED BAY, Co-Trustees of the Bay Family Trust,
Plaintiffs,
v.
ANADARKO E&P COMPANY LP; and
ANADARKO LAND CORPORATION,
Defendants.
______________________________________________________________________________
OPINION AND ORDER DIRECTING BRIEFING
______________________________________________________________________________
THIS MATTER comes before the Court pursuant to the instructions of the 10th Circuit
Court of Appeals in Bay v. Anadarko E&P Onshore, LLC, 912 F.3d 1249 (10th Cir. 2018). That
order vacated the judgment entered by this Court in favor of the Defendants and remanded the
matter for further proceedings consistent with the court’s opinion.
The Court assumes the reader’s familiarity with the proceedings to date and the 10th
Circuit’s opinion, and the Court will not further summarize them. The Court is given pause by
the 10th Circuit’s discussion of the “material interference” standard, which requires the Bays to
establish that the Defendants’ use of the surface estate “completely precludes or substantially
impairs” the Bays’ ability to make use of the parcel as a whole. 912 F.3d at 1262. The surface
owner must show that “surface use [is] infeasible or nearly impossible under the circumstances”
created by the exploitation of the mineral estate. Id. at 1261. It is not sufficient for a surface
owner to simply demonstrate that “inconvenience and some unquantified amount of additional
expense” results from the exploitation of the mineral estate; rather, the surface owner must show
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that it “has no reasonable alternative method to maintain the existing use” of the surrounding
property once mineral exploitation begins. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 252
(Tx. 2013), cited with approval in Bay, 912 F.3d at 1262. Noting that this standard presents a
“high bar,” the 10th Circuit expressed some doubt as to whether the evidence that the Bays had
adduced at trial would be sufficient to satisfy it, but it declined to reach that question because it
had not been raised on appeal.
The 10th Circuit’s observation presents a potential question of legal sufficiency, similar to
a mid-trial motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50 that would, if
resolved in favor of the Defendants, ameliorate the need for a re-trial. As such, the Court
believes that it is appropriate to address the issue on the record created at the September 2017
trial in this case.1
Marvin Bay testified about farming two plots of land, the North Farm and the South
Farm, both located in Eaton, Colorado. The Bays grow sugar beets, alfalfa, corn, wheat, and
beans on the parcels in question. The Bays’ claims here concern gas wells that Noble Energy,
the Defendants’ subcontractor, drilled on the Bays’ property – two on the South Farm and three
on the North Farm – beginning in or around 2006. The drilling and operation of the five
challenged wells has not prevented the Bays from continuing agricultural uses on both parcels,
and indeed, it appears that the farms remained operational through the time of trial in 2017. In
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As the 10th Circuit’s opinion acknowledges, this Court’s prior rulings and the parties’
proposed jury instructions recognized that the Bays had the burden of proving at trial that the
surface estate was sufficiently impaired. 912 F.3d at 1262 n. 9. Thus, the Court sees no reason
to reopen the record or permit the submission of evidentiary material beyond that which the Bays
presented at trial for purposes of resolving the issue at this time.
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explaining how the five wells in question2 affected his farming operations, Mr. Bay identified
several categories of concerns.
First, he described some degree of inconvenience that resulted from farming operations
being conducted in the vicinity of the wells in question. Mr. Bay explained that when he is using
farm equipment and approaches one of the well locations, “I have to stop, lift up my equipment,
back up, go around the well where I can’t cut any crops . . . [and] start on the other side.” Mr.
Bay explained that the resultant “gap” – that is, the area he is unable to farm around the well site
because he had to lift his equipment – becomes “a good place for weeds to grow.”
Second, he described “compaction,” that is, a compacting of soil that results from oil and
gas operations. Mr. Bay explained that compacted soil “will not grow very good crops,” but that
“as you keep farming [it], eventually it gets better and better.” Mr. Bay’s testimony seemed to
suggest that compaction had occurred along fence lines that Noble Energy had constructed to
section off its production activities, such that crops near those fence lines were less healthy than
crops elsewhere on the property. Later, Mr. Bay also described a situation in which a production
vehicle was driven on thawed land, resulting in compacted “wheel tracks” going out that
particular well location. Mr. Bay estimated that it took five years before the affected soil could
be brought back up to grade level so that it could be properly irrigated.
Third, Mr. Bay described a circumstance in which a developer – Mr. Bay’s testimony
was not particularly specific as to who, when, and where – failed to completely restore a mud pit,
leaving a situation where a portion of the property was “real sticky.” Mr. Bay stated that one of
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The Bays had previously consented to two oil and gas wells being drilled on the property,
and they emphasized that their trespass claims in this case did not relate to those two wells. The
Court understands Mr. Bay’s testimony discussed herein to be referring to the specific
incremental effects that the five challenged wells had on the property, over and above the
impacts from the two unchallenged wells.
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his center pivot sprinklers traveling over that area “would sink into that” former pit area and
could not be moved. Mr. Bay stated that he tried to dig the sprinkler out but was unable to, and
that as a result, he would have to “go in there with a tractor and pull the sprinkler out of the
hole.” Doing so would causing him to “knock[ ] all the corn down” in the area around that
sprinkler.
Fourth, Mr. Bay complained that soil conditions over flow lines installed by Noble were
“very soft,” such that, again, irrigation equipment would sink into the soil and have to be pulled
out. Mr. Bay stated that “we had to pull it out several times,” and that, eventually, he decided to
“put rocks and sand in the bottom of the sprinkler track.” He testified that even this solution was
suboptimal, because if “you knock some of the rocks out, now you’ve got these rocks out in your
field.”
Fifth, Mr. Bay indicated that Noble is “supposed to keep the weeds out” on those portions
of property it occupies. He acknowledged that Noble “send[s] out somebody to spray weeds”
about once a year, but that “we’ve got a tremendous bunch of weeds” around the well locations.
Sixth, Mr. Bay stated that the South Farm is on hillier property and that “water can get in
the . . . trenches where they put down the flow lines and run down those and erode the hillside
out some.”
Seventh, Mr. Bay testified, somewhat unclearly, that “it wastes some water on the center
pivot . . . it gets in the wrong rows and it runs off the field because of the flow lines.”
Eighth, Mr. Bay complained that Noble employees driving down access roads to get to
the wells “knock[ ] out the crop in about a 15-foot wide strip going out to the wells.”
Ninth, Mr. Bay explained that the construction of the wells entailed “lights all time of the
night” as well as noises from vehicles driving out to the well sites and as a result of other well
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operations. Mr. Bay also testified that, during the course of well drilling, there was a
“tremendous amount of diesel” exhaust fumes that was “not a pleasant thing.” These were
problems associated particularly with one well that were located close to the Bays’ residence on
the North Farm. Mr. Bay also testified that the drilling of that well caused the residence’s
drinking water to become clouded and sulfurous, although that problem abated over time.
Finally, Mr. Bay testified about unspecified concerns about “radiation and asbestos” on
the property, based on a story that he had read about in the Denver Post, as well as references to
those substances in an asset purchase agreement between Noble and the Defendants that Mr. Bay
reviewed.
None of the impacts Mr. Bay described at trial would seem to suffice to constitute a
material interference with the Bays’ ability to substantially all of the remaining portions of the
parcel for agricultural purposes. Indeed, it appears to be undisputed that the Bays continue to use
the majority of both the North and South Farms for the same agricultural uses that they employed
prior to 2006, with the exception of certain surface areas that have been appropriated by Noble
for well pads, production facilities, access roads, and other related construction. Mr. Bay’s
testimony makes clear that he is able to continue farming close to and around the well pads,
albeit with some inconvenience to the operation of farming equipment and with some limited
loss in efficiency immediately around Noble’s infrastructure. The record also reflects that
although certain types of construction have intermittently impeded the Bays’ farming operations
– such as irrigation equipment getting stuck in soft soil resulting from Noble’s installation of
flow lines – the Bays have been able to employ reasonable alternative methods to restore their
ability to meaningfully continue farming operations, such as by shoring up the soil in the
sprinkler tracks with sand and rock.
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Nothing that Mr. Bay described appears to rise to the level of the type of impairment
found to be sufficient in Getty Oil Co. v. Jones, 470 S.W.2d 618 (Tx. 1971), cited with approval
in Gerrity Oil & Gas Corp. v Magness, 946 P.2d 913 (Colo. 1997) and in Bay, 912 F.3d at 1256.
In Getty, the surface owner used a central pivot irrigation system with a seven-foot clearance to
make agricultural use of the land. The mineral owner installed two oil wells, one 17 feet high
and the other 34 feet high, essentially preventing the surface owner from making automated use
of four of the six established pivot points for his irrigation system. The surface owner produced
evidence that, due to a labor shortage, automatic irrigation was the only economically-viable way
to make agricultural use of the land. Further, the surface owner showed that it was possible for
the mineral owner to have recessed the wells such that the irrigation system could have cleared
them. The Texas Supreme Court found that these facts were sufficient to create a triable
question as to whether the mineral owner’s actions materially interfered with the surface owner’s
use of the land.
By contrast, in Merriman, another case relied upon by the 10th Circuit, the surface owner
used the land for a cattle operation, having constructed permanent fencing and corrals. The
surface owner also used temporary corrals and pens during “round-up” operations. The mineral
estate owner constructed a well on the property, and the surface owner contended that the well’s
location substantially impaired his ability to continue cattle operations. The evidence at
summary judgment indicated that the surface owner had reasonable alternatives to conduct the
cattle operations at the locations he had previously used. As the Texas Supreme Court
explained, affirming a grant of summary judgment to the mineral owner, the surface owner “did
not explain why corrals and pens could not be constructed and used somewhere else on the tract[.
I]f they reasonably could be, then his existing use was not precluded.” 407 S.W.2d at 251. The
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court emphasized that there was evidence that the location of the well “precludes or substantially
impairs the use of his existing corrals and pens, creates an inconvenience to him, and will result
in some amount of additional expense and reduced profitability because . . . he will have to build
new corrals or conduct his operations in more phases.” Id. at 252. But the court held that
“evidence that the mineral lessee’s operations result in inconvenience and some unquantified
amount of additional expense to the surface owner does not rise to the level of evidence that the
surface owner has no reasonable alternative method to maintain the existing use.” Id.
Here, Mr. Bay’s description of the effects that flow from the construction of the wells in
question here appear to be the same sorts of mere inconveniences and inefficiencies as in
Merriman, not the wholesale deprivation of his ability to make productive agricultural use of the
land as in Getty. As such, on the record before this Court and upon the standards announced by
the 10th Circuit, this Court would be inclined to grant judgment as a matter of law to the
Defendants on the element of material interference with the surface use, finding that the Bays
have not come forward with sufficient evidence to carry their burden on that element. Before
doing so, however, the Court believes it appropriate to allow the Bays an opportunity to be heard
on the sufficiency of the evidence in the record.
Accordingly, within 21 days of this Order, the Bays may file a brief addressing the
evidence in the trial record and whatever legal authority they wish to rely upon to demonstrate
their ability to establish the material interference element. The Defendants shall have 14 days
from the Bays’ filing to file any response. If the Court ultimately concludes that the Bays’
evidence, taken in the light most favorable to them, is sufficient for a prima facie showing, it will
begin the process of
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setting this matter for a new trial; if not, the Court will enter judgment on behalf of the
Defendants.
Dated this 28th day of May, 2019.
BY THE COURT:
Marcia S. Krieger
Senior United States District Judge
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